Congratulations! You are one of the four lucky winners of the New Years Grand Lottery. Your share of the prize is 6.25 million TRY. You do not want to reveal your identity and you would like a bank to represent you. The branch manager of a local bank agrees to represent you with full confidentiality, but to make things more interesting, she makes you an offer.

She offers to make you monthly payments (schedule given in range C4:C23) at the end of every month if you keep your prize in a bank account without withdrawing until August 31st, 2009. On that date, you can withdraw your prize earning as you wish.

In case you do not accept this offer, she is going to charge you 0.1% of your prize as transaction fees, which will be automatically deducted from your earnings that you will receive in cash on February 29th, 2008.

a) In cell F5, calculate the present value of the banks offer as of January 1^st, 2008.

b) In cell F6, calculate the present value without the banks offer as of January 1^st, 2008.

c) In cell F7, use an IF function that will return yes if the results in parts (a) and (b) suggest that you should accept banks offer and no otherwise.

Opportunity cost of capital (per month) 1,5% Transaction Fee % 0,1% | Month 6.250.000 YTL 2008 Jan Feb Mar Apr May Jun Prize PV of bank's offer PV without bank's offer Accept the offer? Jul Aug Sep Oct Nov Dec 2009 Jan Feb Mar Apr May Jun Jul Aug Total End-of-month payment 50.000 YTL 50.000 YTL PARTA 50.000 YTL PART B 60.000 YTL PART C 60.000 YTL 60.000 YTL 70.000 YTL 70.000 YTL 70.000 YTL 80.000 YTL 80.000 YTL 80.000 YTL 90.000 YTL 90.000 YTL 90.000 YTL 100.000 YTL 100.000 YTL 100.000 YTL 100.000 YTL 6.350.000 YTL